Chancellor Jeremy Hunt will make his first budget announcement on 17 November. Here’s what to expect and how it might effect HR.
As reported by Sky News, the new budget is rumoured to include public sector pay rises, increases to benefits in line with average earnings rather than inflation, and an expansion of the windfall tax on energy companies.
Paul Farrer, founder and chairman of recruitment agency Aspire, told HR magazine that he hoped the government would keep the national insurance rate steady going forward, or consider reducing it even further, following the reversal of the 1.25% increase implemented in April 2022.
He said: “A lower tax regime keeps unemployment low and maximises government receipts through income tax and corporation tax. Otherwise, employers are forced to cut costs, and redundancies are usually the path of least resistance – then the exchequer loses the combined national insurance and income tax.
“If this government wants to be seen as pro-business, it must create the right environment for businesses to thrive. Committing to maintaining employers’ national insurance at its current rate is the minimum; while tax cuts in this climate are unlikely, a reduction would go some way to rebalancing the tax burden, incentivising employment at a crucial time.”
HR and government budgets:
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HR reacts to IR35 repeal
The previous budget announced a repeal of IR35 reforms for self-employed workers, before those plans were eventually scrapped.
Seb Maley, CEO of self-employed tax specialist Qdos, warned against any changes to tax thresholds.
He said: “The autumn budget comes at a critical time for freelancers and contractors. Speculation is mounting that the chancellor will target dividend tax, potentially by reducing the tax-free threshold. This would be a short-sighted, counterintuitive move – one that increases the tax burden on millions of small business owners at the worst possible time.
“Having U-turned on the IR35 reform repeal, the government has broken promise after promise. Now is not the time to inflict more pain on the self-employed, who hold the key to the economic recovery.”
Julia Kermode, founder of independent worker support company Iwork, called for the government to increase support for workers who need a side hustle to help make ends meet.
She said: “Ahead of the autumn budget, all the talk is about tax hikes – and they may well materialise. But I can’t help but think that the government should be doing the opposite, particularly for anyone needing to supplement their current income.
“Take the trading allowance, which allows you to earn just £1,000 a year in miscellaneous income from a side hustle until tax kicks in. This is a tiny amount and doesn’t even come close to the levels of extra income people need to pay their bills – so it really needs to be increased to at least £3,000.
“Nearly half of Brits have a side hustle. Encouraging more people to earn money independently and start their own businesses can only be a good thing for the economy. Adjusting the trading allowance threshold is a quick win and one that will give gig economy workers and second jobbers a massive boost.”